Friday, December 19, 2008

China dozzes off, the world will feel it

Remember Napoleon's famous line - "As China wakes she will wake the world"? Well, she woke up in 1978, got to work, and now she's about to get some sleep. The following article highlights China's coming slumber on the heels of the economic crisis.

China's exports have taken a hard hit and the government is frantically trying to implement policies to mitigate a further drop. Beijing's response, which is not going to sit well in Washington, is the devaluation of the Renminbi to keep Chinese exports competitive. Another, is the massive fiscal stimulus that has already been enacted by the government, with further spending almost surely on the way. Not that China doesn't have the headway at the moment. It's foreign reserves are the largest in the world.

Nevertheless, the Dragon is looking increasingly tired these days, and a nice rest is likely to cause serious problems for it's political masters in Beijing. The most important will be 'maintaining social stability' (a favoured utterance of the Chinese Communist Party) in the face of increasing domestic disturbances.